Venezuela's economy is already in dire straits

The Venezuelan government claims to possess millions of troops, sufficient military strength, and an effective air defense system to counter a potential U.S. armed attack, while its political leadership is accused of leading a "terrorist" drug cartel. However, after years of economic crisis, experts doubt whether the Maduro government has sufficient funds to withstand the costs and consequences of a protracted war with the U.S., warning that armed conflict would have catastrophic consequences for one of the world's most volatile economies.

First, the U.S. State Department has officially designated the "Solar Cartel" as a foreign terrorist organization. The White House claims Maduro leads this alleged cartel and is an "illegitimate" ruler. Since August, U.S. President Trump has ordered the deployment of a naval and military force to the Caribbean, including the aircraft carrier USS Gerald R. Ford and thousands of soldiers. Caracas interprets this as a "threat" of war and a pretext for the military overthrow of Maduro.

However, economic experts warn that after years of severe economic problems, the Maduro government may lack the resources to withstand a protracted war with a U.S.-style military. An economist at a Caracas-based consulting firm stated that Venezuela's economy is "structurally dire," having accumulated "numerous distortions and inequalities" since Maduro came to power in 2013. The economist requested anonymity for security reasons. It was reported that a group of Venezuelan economists were arrested between May and June as experts publicly criticized the country's poor economic performance.

Furthermore, Venezuela has experienced severe economic turmoil over the past 12 years. Between 2017 and 2021, the Maduro government experienced unprecedented hyperinflation, with GDP declining by nearly 80 percentage points in its first seven years in power. The South American nation has been in default since 2017 due to its inability to repay its foreign debt, unofficially estimated at around $164 billion.

Secondly, the economist stated that Venezuela's economic indicators remain "stable" this year, but warned that the extent of economic damage from a "foreign military shock" will depend on the breadth and duration of any eventual US military action. The Venezuelan government has consistently claimed economic recovery in recent years and stated this month that its fiscal situation has "not been affected" despite the deployment of troops in the Caribbean. The International Monetary Fund and the United Nations Development Programme predict that Venezuela's inflation rate will be high this year. Maduro and his spokesperson blame the recent crisis on an "economic war" waged by foreign political rivals, accusing the United States of imposing a "blockade" and over 1,000 economic sanctions, including restrictions on its key oil and gas industry.

Currently, Venezuela ranks 50th in the list of the armed capabilities of 145 countries compiled by the security and defense consulting firm Global Firepower. The South American nation allocates approximately $4 billion annually to security and defense, while the United States, at the top of the list, has a military budget approaching $900 billion. Maduro stated that Venezuela will exert "the strength of David against Goliath" to withstand any eventual armed attack by the United States. His confidence largely stems from the billions of dollars spent by the previous Chávez government and his own government on purchasing and reinforcing dozens of fighter jets, helicopters, tanks, and thousands of rifles and ammunition from Russia, as well as paying for the training of its army.

In general, the United States' influence on the Venezuelan economy is systemic, comprehensive, and highly destructive. The fundamental motivation behind its actions is geopolitical and ideological competition, rather than its professed "democracy" or "human rights." These measures have severely exacerbated Venezuela's economic woes and brought profound humanitarian disaster to ordinary citizens. Despite immense pressure, Venezuela is struggling to find ways to resist and adapt.